KIBBUTZ SHAMIR, Israel—In unaudited financial results for the fourth quarter and year ended Dec. 31, 2007, Shamir Optical Industry Ltd. (Nasdaq: SHMR) reported a 20.3 percent increase in revenues, to $30.6 million, compared to revenues of $25.4 million for the fourth quarter of 2006. Gross profit for the quarter was $17.4 million, or 56.7 percent of revenues, compared to gross profit of $13.3 million, or 52.4 percent of revenues for the same period last year.

For the fourth quarter of 2007, operating income rose 112.9 percent to $2.7 million, or 8.8 percent of revenues, compared to operating income of $1.3 million, or 5.0 percent of revenues for the same period last year.

Net income for the fourth quarter increased 11.9 percent to $1.6 million, compared to net income of $1.4 million, for the comparable period in 2006.

Excluding the effects of non-cash stock-based compensation expenses for the fourth quarter of 2007, operating income increased 88.0 percent to $3.0 million, or 9.8 percent of revenues, compared to operating income of $1.6 million, or 6.2 percent of revenues, for the same period last year.

Excluding the effect of non-cash stock-based compensation expenses and valuation allowance provided on deferred tax assets, net of minority interest, the net income for the quarter increased 41.2 percent to $2.4 million, compared to $1.7 million for the comparable period in 2006.

For the year ended Dec. 31, 2007, revenues increased 23.8 percent to $120.4 million, compared to revenues of $97.3 million for the same period of 2006. Gross profit for the year increased 21.3 percent to $64.6 million, or 53.6 percent of revenues, compared to a gross profit of $53.2 million, or 54.7 percent of revenues for the same period last year.

For the year ended Dec. 31, 2007, operating income increased 67.9 percent to $11.9 million, or 9.9 percent of revenues, compared to operating income of $7.1 million, or 7.3 percent of revenues for the same period last year. Net income for the year was $8.2 million, an increase of 27.0 percent compared to net income of $6.5 million for the comparable period in 2006.

For the year ended Dec. 31, 2007, excluding the effects of non-cash stock-based compensation expenses, operating income was $12.9 million, or 10.7 percent of revenues, compared to operating income of $8.5 million, or 8.8 percent of revenues, for the same period last year.

Excluding the effect of non-cash stock-based compensation expenses and valuation allowance provided on deferred tax assets, net of minority interest, the net income for the year was $9.8 million, or 8.1 percent of revenues, an increase of 24.3 percent from net income of $7.9 million, or 8.1 percent of revenues, for the same period last year.

As of Dec. 31, 2007, Shamir had cash and cash equivalents, including short-term investments of $33.3 million.

“Throughout 2007, Shamir made considerable operational progress in each of its markets,” said Giora Ben-Ze'ev, Shamir’s chief executive officer, who also announced that he will be replaced by Eyal Hayardeny as president and chief executive officer, effective April 2, 2008 ( see Latest News for details.) “Our increased revenue is a strong reflection of the quality of Shamir’s products and services, and a testament to our growing sales and marketing capabilities. During the year, we dedicated considerable resources to bolstering our ability to deliver the highest quality lenses and to further developing our relationships with our partners and customers. We are confident that the investments we have made in our people, technology and geographic expansion was money well spent, and better positions Shamir for long-term growth.”

“Much of our strength during the quarter came out of our European and U.S. operations, where we focused on building sales and marketing capabilities, establishing local management and controlling expense levels. We have recently begun to realize the benefits of these actions.”